Annual report and accounts 2023 - Flipbook - Page 150
A.G. BARR p.l.c. Annual Report and Accounts 2023
Notes to the Accounts continued
1.
Accounting Policies continued
Government grants
The Group recognises government grants in accordance with IAS 20. Grants received by the Group are recognised in the income statement and matched against the costs
that the grant are intended to compensate for and are therefore shown net.
Leases
The Group as lessee
For any new contracts entered into,the Group considers whether a contract is, or contains, a lease. A lease is defined as any contract, or part of a contract, that conveys the
right to use an asset (the underlying asset) for a period of time in exchange for consideration. To apply this definition the Group assesses whether the contract meets three
key evaluations which are whether:
• The contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available
to the Group;
• The Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the
defined scope of the contract; and
• The Group has the right to direct the use of the identified asset throughout the period of use. The Group assesses whether it has the right to direct the use of the identified
assets through the period of use. The Group assesses whether it has the right to direct “how and for what purpose” the asset is used throughout the period of use
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made
up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the
lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a
straight-line basis from the lease commencement date to the earlier of the end of the useful life of the asset or the end of the lease term. The Group also assesses the
right-of-use asset for impairment where such indicators exist.
Lease payments included in the measurement of the lease liability are made up of fixed payments, variable payments based on an index or rate, amounts expected to be
payable under a residual guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced
for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When
the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets (less than £1,000) using the practical expedients. Instead of recognising the right-ofuse asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
On the balance sheet, right-of-use assets and lease liabilities have been disclosed separately.
Investment in associates
An associate is an entity over which the Group has significant influence that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The results, assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. The investment is recognised initially
in the statement of financial position at cost, and is adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate.
On acquisition, any excess of the cost of the investments over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as
goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of identifiable assets and liabilities over the cost
of the investment, after reassessment, is recognised immediately in profit or loss in which the investment is acquired.
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